New law spells end for small Spanish businesses

LAST UPDATED: 31 Dec, 2014 @ 20:37
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New law spells end for small Spanish businesses

USUALLY a time to celebrate, this New Year marks the end of an era for many small businesses and independent retailers across Spain. 

As of January 1 a change in rental law will see rent controls scrapped to allow landlords to raise rents to whatever they want.

More than 200,000 family-owned stores, bars and restaurants are to be affected by the law change and 55,000 are predicted to shut within the first three months of 2015.

The lifting of the 20-year-old rental cap will also see around 120,000 jobs wiped out from a country which already has a 24% unemployment rate.

Luis de Guindos, the Economy Minister, said the law passed in 1995 ‘gave businesses two decades to get ready for the scrapping of rent controls’.

11 COMMENTS

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  1. The feather-bedding comes to an end and cushy complacent so-called businesses will now face the cold draught of market forces. Let’s see how they like that up ’em.
    The new level playing field will favour those who have managed to build a business in spite of not being recipients of this foolish largesse, which mainly favours Spanish mom and pop enterprises.

  2. Sorry to spoil the narrative here, but those of us who have rented from Spanish landlords or agents (both commercial and domestic) can tell you on the whole they are very amenable to reductions, especially once you’ve shown yourself to be a good payer. I’ve been able to secure rent reductions on 3 or 4 occasions from different landlords. Equivalent rents are twice as expensive (perhaps more when you add in rates) back in the UK. Have to agree with Stefanjo too – the old feather-bedded businesses set up for “services” in the 30s conflict will now have to compete on an even basis.

  3. Much of our experiences in Spain is that when business drops off including leisure, the Spaniards hike the prices rather than reduce them, golf for example. There again you can get rent reductions where there’s a glut of properties for sale or rent, often poorly built apartments in Spain, you wouldn’t get reductions in London and other UK hot spots, quite the reverse, whether commercial or residential, comes down to supply and demand, both countries completely different in that respect.

  4. After 10 years in business in Spain, I can tell you that in the south, they would 100% prefer to have it empty than reduce the rent and when things get tough they INCREASE rather than decrease. Very, very strange mentality. It goes for food prices in restaurants etc. Ask them to explain and they’ll simply give you this brilliant logic:

    We have less customers now so we have to charge higher prices!

    They clearly understand market forces to a tee.

  5. Again my own experiences go against the narrative being told here. Neutrals can judge for themselves – plenty of operators in chain restaurants like Lizzaran and 100 Montaditos who have been at the forefront of lower prices in Spain. It’s not just rents that have decreased a lot – you will find that (for example) a coffee costs just 1.10 or 1.20 euros even in bigger cities, compared with 3 euros or more for a coffee in a UK cafe. And since I’ve found (on at least 3 occasions) that domestic landlords have been willing to reduce the rent once they see I’m a good payer, then I simply don’t believe the meme being spread here that the Spanish don’t negotiate prices.

  6. @Squiddy, it’s funny when you don’t agree with something that you call it a “meme”. Dave is spot on, this is exactly what happens in Spain and everyone I’ve ever talked to has told me the same, with very few exceptions.

  7. To repeat, I’ve negotiated rent reductions on various places with Spanish landlords (and not just during the crisis either), and know others resident in Spain who’ve done the same. Once you show you are a reliable payer you will be listened to. I’m not sure that any of those who claim different have even rented and tried this. And for those who claim that Spanish businesses can’t adapt to recession with lower prices, try chains like Mercado La Provencal or Lizarran for a caña at 40 cents or so! Or look out the budget Menu del dia – extremely price competitive in many towns and cities.

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